The Truth About the VA Loan
As a former United States Marine and a Veteran of Foreign Wars, I have a passion for working with US Military Veterans. When I began my real estate career in April 2013, I immediately set out to work with Veterans. Why? I knew that it was (and still is) an underserved community of individuals who were in desperate need of education and advocacy. I say this because, although part of a special interest group by and large, the individuals in the Veteran community are not as easy to distinguish; they are spread across every race, culture, religion and creed that our great nation has to offer.
In addition, Veterans have long been the victims of predatory lending, particularly at car dealerships and payday loan services close to base. Pair this with a 17 year old with no financial literacy, and it can be a recipe for disaster. I remember a fellow Marine who drove back to base in his shiny new car, and when asked about his interest rate, he shrugged and said that he had no idea. It turned out that the “military friendly” car dealership had sold him a car with a 24% interest rate. Because of situations like this, many Veterans are hesitant to trust anyone who may be in a position to take advantage of them. This is especially so with a VA loan. Many Veterans are disgruntled when they exit the military and believe that their loan will actually be serviced by the VA and understandably want no part of it. Add the fact that the VA loan may be the only loan that a Veteran qualifies for, and some brokers say they “don’t like dealing with VA loans.” My answer to that would be that the Soldier, Sailor, Marine, Airman or Coast Guardsman probably didn’t like going in to harm’s way for you, but they did it anyway.
I joined the board of directors for the Seattle Chapter of VAREP, The Veteran’s Association of Real Estate Professionals. VAREP is a 501-C3 non-profit and a national organization that seeks to empower industry professionals such as realtors, lenders, title/escrow, etc., with the knowledge to serve and help Veterans while guiding them through the home buying process. The bottom line is this: the VA Loan is the best loan program available to a Veteran. Additionally, as a national organization and as a battle-hardened community, we are always on the lookout for cases where listing agents are discriminating against our buyers based on the fact that they are using a VA loan so they can be made an example of what not to do.
Here are some of its many advantages that the reader may not be aware of:
• No down payment required up to a loan size of $517,500 in King County (it can vary county by county)
• No mortgage insurance is required on all VA loans (this is usually required on all other loan programs with less than 20 percent down and can be several hundred dollars a month)
• In King County, loan sizes over $517,500 are available as long as the veteran puts 25 percent down on the difference between the county loan limit and the purchase price (for example, on a $1M purchase, the down payment required would be $120,625 which is much less than what would be required on most other loan programs and without any mortgage insurance)
• Lower rates than most other lending programs due to the VA guarantee on the loan
• Ability to refinance in the future without an appraisal or verification of income
• Loan may be assumable to a non-veteran buyer
• Low credit scores may be acceptable (some lenders go down to a 580 score or no score)
• No reserves are usually required so a Veteran may be able to purchase without any savings
• Active duty, retired and discharged Veterans may be eligible (all branches of service). Surviving spouses of Veterans may also be eligible
Unfortunately, only one out of eight Veterans who qualify for the VA loan is currently using it, mainly because they are not aware of their benefits. Truth be told, we are aware that the VA loan has some mechanical flaws, which we are currently addressing with Washington, D.C. Last June we were on Capitol Hill talking to lawmakers about VA loan discrimination and updating the program because it has not changed since WWII. We will be back this year, and every year moving forward, until we create the changes that are needed.
If there is anything that I can leave you with, it’s that there are many among us who need help but are oftentimes too proud to ask for it. We have a generation of young warriors among us walking around with wounds that don’t bleed, and although they won’t ask for it, they would love someone to link arms with them and help them out. Over the next five years, there will be millions of VA eligible Veterans separating from the military. We are on a mission to see that when they do, they will be able to take advantage of a home buying program that they fought so hard for and truly deserve.
Steve Harwood is a Windermere Real Estate broker on the Eastside. He is a Veteran of foreign wars with a passion for helping our service men and women. Make sure you visit his website and social media pages like Facebook and Twitter. If you have any questions regarding VA loans or his work with Seattle VAREP, you can contact him via steveharwood at windermere dot com.